(a) As used in this section:

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Terms Used In Alabama Code 19-3B-508

  • Annuity: A periodic (usually annual) payment of a fixed sum of money for either the life of the recipient or for a fixed number of years. A series of payments under a contract from an insurance company, a trust company, or an individual. Annuity payments are made at regular intervals over a period of more than one full year.
  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Attachment: A procedure by which a person's property is seized to pay judgments levied by the court.
  • Bankruptcy: Refers to statutes and judicial proceedings involving persons or businesses that cannot pay their debts and seek the assistance of the court in getting a fresh start. Under the protection of the bankruptcy court, debtors may discharge their debts, perhaps by paying a portion of each debt. Bankruptcy judges preside over these proceedings.
  • Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
  • Contract: A legal written agreement that becomes binding when signed.
  • Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
  • following: means next after. See Alabama Code 1-1-1
  • Garnishment: Generally, garnishment is a court proceeding in which a creditor asks a court to order a third party who owes money to the debtor or otherwise holds assets belonging to the debtor to turn over to the creditor any of the debtor
  • person: includes a corporation as well as a natural person. See Alabama Code 1-1-1
  • Restitution: The court-ordered payment of money by the defendant to the victim for damages caused by the criminal action.
  • state: when applied to the different parts of the United States, includes the District of Columbia and the several territories of the United States. See Alabama Code 1-1-1
  • United States: includes the territories thereof and the District of Columbia. See Alabama Code 1-1-1
(1) ASSIGNMENT or ALIENATION, and any conjugation thereof, includes any anticipation, assignment at law or in equity, alienation, attachment, garnishment, levy, execution, or other legal or equitable process. The term includes:

(i) any arrangement providing for the payment to the employer or other sponsor of such plan of benefits that otherwise would be due the participant under the plan;
(ii) any direct or indirect arrangement, whether revocable or irrevocable, whereby any person acquires from a participant or beneficiary of such plan a right or interest enforceable against the plan in, or to, all or any part of a plan benefit which is, or may become, payable to the participant or beneficiary;
(iii) any attachment, execution, seizure, or the like, or under any form of legal process whatsoever; and
(iv) the operation of any bankruptcy or insolvency laws under 11 U.S.C. § 522(b) as from time to time amended. Notwithstanding the foregoing, the term does not include those items excluded from the definition by Treasury Regulations § 1.401(a)-13(c)(2).
(2) CODE means the Internal Revenue Code of 1986, as from time to time amended, or as at any time superseded by reenactment, recodification, or adoption of any other similar revenue law. Reference to specific sections of the code shall include references to their successor sections as a result of renumbering or recodification at any future date.
(3) QUALIFIED ROLLOVER CONTRIBUTION means any of the following:

a. Amounts qualifying as nontaxable rollover contributions or direct transfers under Section 402(a)(5), 403(a)(4), 403(b)(8), or 403(d)(3) of the code before January 1, 1993.
b. Amounts qualifying as nontaxable rollover contributions or direct transfers under Sections 402(c), 402(e)(6), 402(f), 403(a)(4), 403(a)(5), 403(b)(8), 403(b)(10), or 408(d)(3) of the code on or after January 1, 1993.
c. Amounts treated as qualified rollover contributions under Section 408A of the code.
(4) QUALIFIED TRUST includes all trusts created or organized under Section 401(a) of the code, including, but not limited to, a trust forming part of a qualified pension plan, qualified stock bonus plan, or qualified profit sharing plan and includes any trust that would not be qualified but for this section, any trust that has received a favorable determination letter from the Internal Revenue Service of the United States Department of Treasury to the effect that such trust is, or will be upon the satisfaction of certain administrative conditions, a “qualified trust” under Section 401(a) of the code; any qualified annuity plan described in the code, including an individual retirement annuity and individual retirement account (IRA), rollover individual retirement account, an individual retirement plan defined as a Roth IRA under Section 408A of the code; simplified employee pension (SEP), savings incentive match plan for employees (SIMPLE IRA), or other individual retirement plan described in Section 408 of the code; a retirement bond described in Section 409 of the code, as in effect prior to January 1, 1984, any governmental plan described in Section 414(d) of the code; health savings accounts and church plans described in Section 414(e) of the code; a tax credit employee stock ownership plan described in Section 409 of the code; an eligible deferred compensation plan described in Section 457(b) of the code; and any other plan, contract, annuity, account, or arrangement which satisfies the requirements of Sections 401, 403(a), 404(a)(2), 408, 408A, 409, 414(d), 414(e), or 457 of the code.
(5) TREASURY REGULATION means a valid regulation of the United States Department of Treasury codified at Title 26 of the Code of Federal Regulations. References to specific Treasury Regulations include references to amendments and future reenactments or recodifications of such regulations, regardless of how designated.
(b) Except where stated otherwise in this section, benefits provided under a plan, contract, annuity, account, or arrangement which includes or constitutes a qualified trust may not be assigned or alienated, voluntarily or involuntarily, and shall be exempt from the operation of any bankruptcy or insolvency laws under 11 U.S.C. § 522(b), as from time to time amended. This subsection may not be waived by a participant or beneficiary of any qualified plan.
(c) Subsection (b) shall not apply to taxes owed to any local, state, or federal taxing authority, to a qualified domestic relations order as determined in accordance with the procedures for such determination set forth in Section 414(p) of the code and the related provisions of the Employee Retirement Income Security Act of 1974, as from time to time amended, to contributions to a qualified trust that exceed the amounts allowed under the applicable provisions of the code and any earnings thereon, unless otherwise exempt by law, or to criminal restitution orders enforced as civil judgments.
(d) The securing of a loan made to a participant or beneficiary of such a plan shall not be treated as an assignment or alienation under subsection (b) if such loan is secured by the participant’s accrued nonforfeitable benefit under the plan, contract, annuity, account, or arrangement and is exempt from the tax imposed by Section 4975 of the code by reason of Section 4975(d)(1) of the code.
(e) The protections afforded by subsection (b) shall apply to any amounts of money or other assets distributed from a qualified trust if such distribution constitutes a qualified rollover contribution.
(f) Money or other assets distributed from a qualified trust subject to restraint on assignment or alienation of benefits under subsection (b) are not subject to assignment or alienation for the greater of 60 days after the date of distribution or such additional period of time allowed by the Internal Revenue Service to effectuate a valid rollover if the contribution of such money or other assets constitutes a qualified rollover contribution.
(g) Any money or other assets in a qualified trust subject to restraint on assignment or alienation of benefits under subsection (b) cease to be exempt after the account owner’s death, except with respect to any money or other assets in a qualified trust owned or controlled by the surviving spouse of the deceased account owner.
(h) This section does not apply to the Employees’ Retirement System of Alabama, Teachers’ Retirement System of Alabama, and the Judicial Retirement Fund of Alabama.
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